updated 01:36 pm EST, Tue December 18, 2012

Instagram to use metadata to serve ads, reserves right to use photos

Popular photo sharing service Instagram updated its terms of service this week, giving Instagram expanded rights to monetize content its users upload and to serve them ads. The new terms are part of Instagram's ongoing shift toward monetization, as Facebook, which bought the service for $1 billion earlier this year, looks to capitalize on that purchase. Instagram describes the terms as "part of our new collaboration" with Facebook and says they are meant to bring about "better experiences for our users."

The new Terms of Use become effective on January 16, 2013. Users terminating their accounts before then will not be subject ot the new rules. The basic terms contain the standard proscriptions common to most modern web services: users must be of a certain age, will not create spam accounts, will not defame others, will not post hateful or pornographic material, etc.

The "Proprietary Rights in Content on Instagram" section, though, contains many of the changes that have alarmed some users. While Instagram "does NOT claim ANY ownership rights" on content posted, the terms do state that users have granted the company a "non-exclusive, fully paid and royalty-free, worldwide, limited license to use, modify, delete from, add to, publicly perform, publicly display, reproduce and translate such Content." That clause carves out an exception: content that is not shared publicly "will not be distributed outside the Instagram Services."

The following clause acknowledges that Instagram is in part supported by advertising revenue and reserves the right to "place such advertising and promotions on the Instagram Services or on, about, or in conjunction with" user content.

Another section details how Instagram may at times go about serving the aforementioned ads. Instagram users agree "that a business or other entity may pay [Instagram] to display your username, likeness, photos (along with any associated metadata), and/or actions you take, in connection with paid or sponsored content or promotions, without any compensation to you." The company also reserves the right to "not always identify paid services, sponsored content, or commercial communications as such."

In a statement to the BBC, Instagram said that the new policy "means we can do things like fight spam more effectively, detect system and reliability problems more quickly, and build better features for everyone by understanding how Instagram is used." The company also said that the new terms are meant to make it easier for the service to work with Facebook.

The new terms have caused something of an uproar, with some outlets suggesting the move could turn Instagram into essentially a massive stock photo service, only with Instagram -- not the user photographers -- reaping the benefit of fees. Still others see the potential for a bigger battle in the photo sharing segment, as the new terms could turn off some users and send them looking for other options. Instagram's competitors, including Twitter and Flickr, have recently rolled out app updates that add filters reproducing much of what's possible on Instagram.